02 Aug 2023

Transcript – 3AW with Neil Mitchell: APPEA Chief Executive Samantha McCulloch talks Victoria gas ban in new homes & activists targeting private home of APPEA Chair

Transcript: APPEA Chief Executive Samantha McCulloch talks about the Victoria ban on gas in new housing developments and responds to activists targeting private home of APPEA Chair

Interview with 3AW Radio Neil Mitchell


Neil Mitchell: On the line is the chief executive of the industry body the Australian petroleum Production Exploration Association, Samantha McCulloch. Good morning.

Samantha McCulloch: Good morning, Neil. Thanks for having me.

Neil: We’ll get to the issue of the home protests in a moment, but I got the sense listening to the minister in Victoria last week on the gas restrictions, it was a bit like a thin end of the wedge, do you know where it’s going now, here now in Victoria?

Samantha: The announcement by the Victorian Government last week, the ban on new gas connections to new homes, really is removing the choice from households. There are 2 million households in Victoria that rely on gas and those households that are relying on both gas and electricity actually have a lower carbon footprint and an all-electric home. And that’s because around 60% of the power provided in Victoria is coming from brown coal. So, these announcements are actually removing that choice away from consumers, but delivering limited or no climate benefits. The fact is, we will be relying on gas and gas will be playing an incredibly important role in our energy mix for decades to come and that’s consistent with a net zero transition. So, as we’re moving away from coal, and as we’re seeking to deploy more renewables, gas is playing an increasingly important role.

Neil: So, is the Victorian government virtue signaling, is that what it’s about?

Samantha: Well, I can’t speculate on the motivations of the Victorian Government. But I think we need to really look at the facts and the practicalities that, in Victoria, we’ve got more than 2 million households relying on gas, we know gas will need to provide more generation capacity in the power system. But it’s also fueling around 40% of Australia’s manufacturing needs and what we actually want to see more investment in more supply, the challenges we’re seeing in Victoria, because the signals that the government is sending a stifling investment, and that investment is needed to really bring down the costs of gas.

Neil: Okay, the minister seemed to say this was a starting point. I mean, he got concerned that gas will eventually be banned totally in Victoria.

Samantha: Well, gas is playing such an important role, it would be completely impractical to ban gas. And I think it’s interesting to reflect on the fact that all of the other states have declined to follow Victoria down this particular path. They recognise the important role of gas in our energy mix, not just for electricity generation, but for households for manufacturing and other sectors and the fact that we will need to rely on gas or for decades to come consistent with reducing emissions.

Neil: What will it do to bills, power bills, or energy bills for the average house, in your view?

Samantha: When you’re looking at per unit of energy, gas is actually cheaper than electricity. So essentially, these changes are actually putting more cost burden onto households they’re already struggling. What we need to see is actually, as I said, more investment in new supply – that’s the key to bringing down the cost of not just power generation but also gas. And just to clarify, in Victoria, gas shortages are being projected by the ACCC, by the Australian energy market operator. The Victorian response is to rely on gas being diverted from Queensland and being transported from Queensland that adds $2 per Gigajoule to the gas. So, this is a more expensive solution than developing gas reserves closer to where they’re being used.

Neil: But isn’t part of the problem. We got plenty of gas in Victoria underground, but we won’t mine it?

Samantha: The bans and moratoriums in the policy signaling of the government certainly have impeded investment. We’ve got the current gas resources in Victoria in decline. That’s a concern, which is why shortages are being forecast because supply is coming off, but demand is still there, demand from households for manufacturing and industry.

Neil: Notice that the crossbench and the greens are going after the industry, Dr. Monique Ryan the members Kooyong, says that the middle arm project in Northern Territory risks creating a cancer alley in the area. What’s your response in response to that?

Samantha: We know we need gas for the energy transition. We need to be practical in terms of how we approach the pathway to net zero. That means more gas in the near term, not just in Australia, but in terms of supporting our neighbors in the region, in terms of transitioning away from the mission.

Neil: Okay, she’s a very well qualified doctor, albeit a new neurologist, not an oncologist. But is there any truth to what she says that it risks creating a cancer alley?

Samantha: I don’t believe there’s any basis for those claims. We’ve been using gas for many decades and it has played an important role in our energy mix will continue to play an important role in our energy.

Neil: The other thing she suggests is it’s like releasing a 1.4 million tonne carbon bomb. What’s your response to that?

Samantha: Again, you know, the situation we’re in today, we’re still relying heavily on coal fired power generation in Australia, but also in our region, and particularly in Asia, where population is growing, economic growth is fueling more energy demand and when coal is the predominant energy source, we need gas to support the energy transition to reduce emissions, not just here in Australia, but overseas. And so Australia’s actually played a really important role through our LNG exports in shifting some of our trading partners away from coal and onto a lower emission fuel.

Neil: The greens in the crossbench want to double the petroleum resource rent tax. What does that do?

Samantha: In terms of the petroleum resource rent tax, you know, this is one tax paid by the industry, it applies to offshore development. In Commonwealth waters, the industry is already paying around $16.2 billion directly into government budgets. That’s last year, the changes that were announced by the government, the federal government in the May budget would see more revenue flowing into the budget. So around $2.4 billion extra in PRRT revenue, just in PRRT revenue, in forward estimates. What we need to consider here is the stability and certainty of the policy environment in Australia. These are very large investments, the gas industry has invested more than $400 billion into the Australian economy and the government budgets and the surpluses that we’re seeing are a direct benefit of that investment.

Neil: So would you cop up the 2.4 billion, but they want to double it to nearly 5 billion, would you not cop that?

Samantha: The changes that were announced in the May budget, we recognise we’re striking a balance between the needs of that certainty and stability and the investment environment and the need for strong and sustainable gas industry in Australia, but also recognising the budget pressures and bringing forward some of that revenue into the budget.

Neil: And this protest of the home of Woodside and the chair of the industry body Meg O’Neill, what happened?

Samantha: Look, I think this is really a disturbing development, I think most in the community will find this behaviour utterly unacceptable for protesters to be seeking to target and threaten and intimidate a business leader and her family as her private home is clearly crossing a line as he said earlier. But unfortunately, it really reflects an escalation in the tactics that we’re seeing used by activist groups in Australia.

Neil: It was early morning, I’m told she wasn’t home, was her family there?

Samantha: I understand the family was at home. And again, it’s an unacceptable development in terms of targeting a business leader in her private home. It’s clearly something that should be out of bounds.

Neil: And what was the ABC crew film crew doing there, how did they know what was going to happen?

Samantha: Well, this is an outstanding question, and I think would be appropriate for the ABC to explain how they came to be at the protest. Again, it’s completely unacceptable that we would have activist targeting the private home of business leaders,

Neil: Do you know, what the ABC TV crew was, from what program?

Samantha: I’m not aware of anything with the report. So, I think this is the question for ABC. Can I also say these protests are counterproductive. When we look at the role of organizations like Woodside and the energy industry and the gas industry, the gas industry can play a very important role in terms of reducing emissions in terms of that transition to net zero. We need the gas to support the transition away from coal. Companies like Woodside and other APPEA members are investing heavily, not just in renewables, but also in technologies like low carbon hydrogen, carbon capture and storage.

Neil: Are you suggesting there might have been some collusion but saw the involvement of the ABC and the activist?

Samantha: I have no answer to that question. This is why I think it’s incumbent on the ABC to explain how they happen to be there. First thing in the morning at a protest that’s targeting a private home.

Neil: Thank you very much for your time, Samantha.